Why Talos Energy Inc (NYSE: TALO) stock is going gangbusters

Talos Energy Inc (NYSE: TALO) stock rose over 13.8% on 14th March, 2019 (as of 11:35 am GMT-4; Source: Google finance) after the company posted better than expected results for the fourth quarter of FY 18. As of December 31, 2018, Talos had proved reserves of 151.7 MMBoe, with 81% comprised of liquids (74% crude oil and 7% NGLs). As compared to the pro forma year-end 2017 reserves, the Company achieved 100% reserve replacement rate. Production for the fourth quarter of 2018 was 4.9 million Boe and was comprised of 3.6 million barrels of oil, 0.3 million barrels of NGLs and 6.2 billion cubic feet (“Bcf”) of natural gas. Oil and NGLs production accounted for 79% of the total production for the fourth quarter of 2018. During the quarter, Talos evacuated non-essential personnel and shut-in production on certain Gulf of Mexico assets as a result of Hurricane Michael, which negatively impacted production. Adjusted EBITDA for the three months ended on December 31, 2018 was $158.8 million and Adjusted EBITDA margin was 61%, or $32.33 per Boe

TALO in the fourth quarter of FY 18 has reported the adjusted earnings per share of 91 cents, beating the analysts’ estimates for the adjusted earnings per share of 64 cents. The company had reported the adjusted revenue of 35.9 percent to $258.7 million in the fourth quarter of FY 18, beating the analysts’ estimates for revenue of $230.1 billion.

Meanwhile, On January 23, 2019, Talos and ExxonMobil had signed an Acquisition Agreement through which Talos acquired 100% interest in the Antrim Project in Green Canyon Block 364. Exxon drilled an exploratory well in GC 364 in November 2017 that encountered hydrocarbons in a sub-salt Miocene reservoir and subsequently divested of the discovery well and the GC 364 lease to Talos for further appraisal and a possible development. Talos plans to drill an additional well to further appraise the discovered resource. The Company is still developing a detailed timeline for the appraisal and development plan over the next few years with significant time ahead of the June 2025 lease expiration.

Furthermore, on January 11, 2019, Talos acquired an approximate 9.6% non-operated working interest in the Gunflint producing asset for $29.6 million from Samson Offshore Mapleleaf, LLC. Gunflint is located in the Company’s Mississippi Canyon core area. The asset’s average production for October and November of 2018 was approximately 1.5 – 1.8 MBoe/d and as of November 30, 2018, had proved reserves of 2.2 MMBoe (approximately 80% proved developed)

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